The Austrian Reiffaisen Bank announced today that, according to their estimates, the growth rate of the banking sector in Serbia has reached 46 percent in the year 2005, which is considerably higher that the regional average for Central and Eastern Europe.

In its report, Raiffeisen Bank estimates that the growth in the banking sector has come about as a result of the increased competition, due to the appearance of new banks in the market through privatization and takeovers. The approving of loans to private citizens has increased by 79 per cent, mostly because of the increase in mortgage loans.

According to the bank’s estimates the loans approved to citizens have amounted to 7.7 per cent of the Gross Domestic Product (GDP), which is well below the average for the region, as in Croatia they amount to 34.4 per cent of the GDP, 23.3 per cent in Bosnia and Herzegovina and 14.7 per cent of the GDP in Bulgaria.

The fact that there is increasing trust in the banks is reflected in the growth of savings in Serbia which increased by 57 per cent. The savings have grown faster than in other countries in the region, but with respect to the participation in the GDP, they are still below the regional average.